On 4 March, 250,000 people marched through London in defence of the NHS. Like so many other anti-austerity marches that have taken place since 2011, there was no idea what to do next. The extra money that came in the Budget the following week was a drop in the ocean: a paltry £100m for GP-led triage in A&E and £325m capital funding over three years for Sustainability and Transformation Plans (STPs) – and then only if they jump certain hurdles. The £2bn promised for social care over three years is non-recurrent and will not meet a growing annual funding shortfall estimated currently at £1.9bn. Social care will continue to be cut, and private care companies will reject more and more the minimal payment rates local councils offer for their services. And within days of the Budget, it was announced that £800m reserves earmarked for mental health services will be used to pay off this year’s hospital debts. Robert Clough reports.

The success of the 44 STPs across England is crucial for the process of re-organising the NHS. The long-term aim is to create an integrated management structure across each of the STP ‘footprints’ or regions which in the short term can slash services sufficiently to keep costs in line with savage funding cuts over the next three years. GP-led Clinical Commissioning Groups (CCGs), over 200 of which were set up under the 2013 Health and Social Care Act, will start to reduce in number. Harbingers of this development are the very recent merger of three CCGs in Manchester and three in Liverpool together with the publication of national guidance on the process in November 2016. That 11 CCGs in the West Yorkshire and Harrogate footprint have agreed to form a joint commissioning group is further evidence of this trend.

The goal of these new management structures is the creation of ‘accountable care organisations’. These require the integration of social care, GP and hospital services, and the replacement of the purchaser-provider split with population health budgets. These autonomous regional health organisations will replace a unified national health service. However, such lofty ambitions require a lot of money upfront: the total capital requirement alone of the 44 STPs is estimated at £10bn, at a time when the NHS capital budget is being constantly raided to prop up indebted hospital trusts. The £325m capital promised in the Budget is a negligible amount compared to £10bn, all the more so since there are plans to use £2bn of capital over the next three years to prop up the day-to-day running costs of the NHS. In reality, as we have argued (see FRFI 254 and 255), the complexity of the STPs and the costs they involve mean that they will focus over the next three years on cutting services and staff to keep within an NHS budget that will be falling in real terms.

The £2bn for social care will be split into £1bn for 2017–18 and £500m for each of the two subsequent years. These amounts are no more than sticking plaster: the Local Government Association says that the funding gap will be £2.6bn in 2020. Three key elements of local authority adult social care involve payment for care home placements, providing care at home, and social worker intervention. All are hit by a combination of funding and staffing crises. 95 councils have had home care contracts cancelled by private companies because they cannot deliver services on the funding authorities offered. The UK Home Care Association has calculated the cost of helping people in their own home is £16.70 an hour, but councils across the UK pay over £2 less than this on average. This lies behind the reduction of 26% in the numbers of older people receiving funded social care – an estimated 400,000 people. A March 2017 BBC Panorama report has revealed that a quarter of the UK’s 2,500 home care providers were at risk of insolvency, and almost 70 had closed down in the previous three months.

At the same time, the Institute of Public Policy Research estimates that there is a need to recruit and train 1.6 million ‘low skill’ health and social care workers up to 2022 in order to replace those leaving the profession as well as to meet increased demand, equivalent to two-thirds of the current low-skill health and social care workforce. Care homes are closing now not just because of inadequate council funding but because they cannot recruit sufficient staff; as it is, the rates which councils can pay for care home placements mean that between 50,000 and 100,000 beds may disappear over the next four years.

The scale of the financial crisis within the NHS has not diminished. The aim was to get hospitals to reduce their combined deficit at the end of 2016–17 to £250m; on the most recent figures it will in fact be £873m. £800m held back in reserves and earmarked for mental health services will be used to plug the gap; research shows that four STPs do not anyway intend to spend the minimum required on mental health service development, and the ambitions of others in improving services are nominal. The expectation is that those hospitals which have failed to meet their savings target for this year will have it added to their targets for 2017–18. This means that some hospitals will have to achieve 10% savings in the next 12 months. As it is, a quarter of all hospitals have rejected their 2017–18 control totals because of their required average savings of 6.4%, describing them as ‘impossible’ and ‘undeliverable’, saying it would be ‘irresponsible’ for their boards to sign up to them. Previous reports have concluded that the maximum could be no more than 2% without reducing or damaging services. The only way they can be achieved is through an enormous extension of waiting lists and an equally massive expansion of other forms of service rationing. The real fight for the NHS has yet to start.